By Alex Hoffman
From the sheer quantity of data available today to the pace of technological development, the future accountant will likely look very different from the accountant of years gone by.
Accounting is no longer an historic practice
Traditionally, accountants have gone through historic financials with their clients. However, in the future, this will likely not be the case. The expectation of an accountant, especially in a small business, is no longer just about giving clients financial statements. Already today, clients are looking for information that is as close to real-time as possible.
And what clients really want from an accounting perspective is to know what that means for their business? How are they going to move forward? How can they leap-frog their competitors? How can they be agile and re-adjust?
In other words, clients expect more business advice from their accountants.
Moving from reporting to acting on insights
Across the different kinds of accounting, from bookkeepers and accountants within small businesses to the CFO at a big multinational, there’s one consistent theme: advisory and insights. The question every business should ask is: “How do we actually use this data that we have available to make very valuable business decisions?” And that is where their accountant, bookkeeper, or CFO steps in.
With increased focus on real-time data, I anticipate that the future of accounting will revolve "around using the data that we have available for insights as opposed to just reporting." And with this shift towards business advice and data insights, accountants’ will be required to pick up some new skills.
New skills of the trade
There’s a long-standing joke about accountants not having personalities. Now is the time to truly break that stereotype. The reality of accounting now is very much centered around client interaction and understanding client needs. Being able to communicate effectively and deliver value to clients in terms of their specific needs is vital.
Accountants need to be able to be ‘both technical and can translate financial information into ‘consumer speak’, especially for business people who don’t understand accounting jargon. Moreover, accountants need to have a firm understanding of industry-specific financials for their clients.
One business's metrics are not the same as another business. You can't cut and paste one ratio for another ratio. You've got to have that technical skill to understand what the ratios are and what that means for the business.”
And then you need to be able to translate this information for your clients so that they will be able to apply it. I would like to emphasise the word “translate” as that is what the future accountant must be – a financial translator.
What are the biggest challenges that accountants are facing today?
The biggest challenges that accountants are facing today are likely to become more prevalent moving forward. These include the following:
A competitive market
For small businesses, it’s become a competitive market. And the ease of use of various accounting tools has facilitated this environment. You might find that the qualification to become a CA is still quite hard, but you don’t necessarily have to have that to be an accountant.
You can still support businesses without that. You can just do a BCOM Accounting and not go through the full CA accreditation. And because the tools are so simple to use, there’s a lot more support than you can get from someone who doesn’t have that higher qualification and you can get it at a cheaper rate.
So, as small businesses begin to realise that they don’t necessarily need a CA to do their accounting, it’s become a lot cheaper for them to hire someone for this role. To stand out from the crowd, accountants need to have something additional to offer.
Fewer distinct roles within an organisation
Previously, the CFO and CIO have played two separate roles in big organisations. However, the CFO is increasingly needing to have a good understanding of software solutions. The CFO of a company needs to be working closely with the CIO in order to acquire the right technology to make informed decisions and guide clients and stakeholders accordingly. And in some cases, the two jobs may simply be collapsed into one.
Similarly, to the case of the CIO and CFO, there used to be a lot of segregated roles within a business, such as a debtors’ clerk and creditors’ clerk, whereas, in the future, many of these can become dual roles because of permission controls. And the efficiencies within accounting systems make it much easier to do that.
Adapting your role according to the latest tech
The ease of use of accounting software has changed accountants’ relationships with their clients. Now, rather than charging clients for every service, we at AWCape set up software for them and then leave the clients to do much of their own work on the input side. This means that the role of the accountant today – and in the future – is much more about relationships and added value than specific tasks.
Your role is no longer about manual tasks. It’s around insights, looking at data, doing trend analysis, pulling in data from other systems. As an example, Syft Analytics play quite nicely in this space with their BI and intelligence. This is a growth area for a lot of accountants - understanding how they combine that data they’ve got from a very powerful system into insights.
The digitisation train has left the station. Those who don’t get on board soon will be left behind.
How do you see things changing in the next 5 or 10 years?
If we can already see the ways in which technology is changing the accountant’s role today, how might this change even more in the future? It’s all about systems integrating with each other. The key is to have different systems in your app stack that speak to each other, rather than working in isolation.
There’s a heavy investment in how to get the systems to talk to each other, share the data, so you get overall insights, not just accounting insights.
Here’s a critical process for system integration as follows:
1. You put foundational systems in place (your accounting software);
2. You have an integration layer to bring all the information together; and
3. You have a data layer that sits across it all - a BI tool that combines everything to give you key insights.
AI and machine learning can enhance the insights you have, but if you don’t have the platform to begin with (part one of the process), you’re not going to get what you need out of that information.
The future is multi-dimensional
The essential principles of accounting, such as debits and credits, haven’t changed for hundreds of years. However, there are new kinds of accounting that could pave the way for the future, such as what I call “dimensional accounting.” In order to explain this, here’s an analogy:
Say you tag every transaction like you would a Facebook picture with your friends. On Facebook, you can connect to their profile as well as the geographic location where you took the photograph. In dimensional accounting processes, you could tag a transaction with things such as:
● A specific product line;
● A region;
● Employee details.
You could save this transaction for later use. As a result of the extra dimensions added to the transaction, when the system generates reports and dashboards for insights, it will be very easy to pivot that data or drill down into the detail underneath it. And this would fundamentally shift how your accounting system is developed.
The future looks primed to revolve around the combination of different kinds of data and how that combination can offer more detailed insights.
Today, common data models are becoming more regular. These models bring together common categories across certain industries. That sort of collaboration is really powerful as it enables high-level reporting in standardized categories across businesses.
The author is Alex Hoffmman, Engagement Manager, Syft Analytics and the contributor is Jeff Ryan is the MD for AWCape, a Sage Business Partner.
This article can be found on Syft Analytics.
BUSINESS REPORT ONLINE